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Wednesday, May 24, 2017

Current Account Vs. Fiscal Results

An anomaly is developing in Greece's domestic and foreign accounts. The historical trend was one of double-deficits, i. e. a deficit in both the budget as well as the current account. Makes sense in as much as a budget deficit increases domestic demand, puts money into the economy, increases imports and, in consequence, leads to a current account deficit.

Since 2010, austerity has taken money out of the economy leading to the well-known collapse in domestic demand. Greece turned a giant primary deficit into a surplus and, simultaneously, turned a giant current account deficit into a surplus in 2015.

In 2016, the primary surplus exploded as more money was taken out of the economy (taxes, etc.). However, an anomaly began: despite this further erosion of domestic demand, the current account went from a surplus of 205 MEUR in 2015 to a deficit of 1,1 BEUR in 2016. This trend now continues in 2017 where the government continued to run a primary surplus (albeit not a large as the year before) while the current account drifted more into the negative territory.

Below are the figures for Greece's current account in the first quarter of 2017, compared with the same period of the previous year. Also, the month of March is compared for both years.

In BEUR.

January-March

March

2017

2016

2017

2016

Revenue
from abroad

Exports

6,7

5,5

2,6

2,0

Services (e. g. tourism)

3,6

3,0

1,3

1,1

Other income

2,6

2,5

0,6

0,8

Current transfers

0,9

0,7

0,2

0,2

------

------

------

------

Total revenue from abroad

13,8

11,7

4,7

4,1

Expenses
abroad

Imports

11,8

9,7

4,5

3,5

Services (e. g. tourism)

2,6

2,3

0,9

0,8

Other expense (e. g. interest)

1,4

1,5

0,4

0,4

Current transfers

0,5

0,6

0,2

0,2

------

------

------

------

Total expenses abroad

16,3

14,1

6,0

4,9

Net
foreign deficit (current account)

-2,5

-2,4

-1,3

-0,8

Trade
balance

-5,1

-4,2

-1,9

-1,5

Services
balance

1,0

0,7

0,4

0,3

Other
balance

1,2

1,0

0,2

0,4

Current
transfer balance

0,4

0,1

0,0

0,0

----

----

----

----

Net
foreign deficit (current account)

-2,5

-2,4

-1,3

-0,8

January-March

March

2017

2016

2017

2016

Exports
"Other Goods"

4,7

4,3

1,8

1,6

Imports
"Other Goods"

8,4

7,8

3,2

2,8

----

----

----

----

Balance
of goods excluding oil and ships

-3,7

-3,5

-1,4

-1,2

Gone are the days of positive surprises with Greece's current account. What is even more disconcerting is the trend: the 2017 deterioration started noticeably in the month of February (January had actually been an improvement) and led to a whopping deterioration of 500 MEUR over the previous year in the month of March alone.

But the real question is: where is the money coming from to pay for this rather dramatic increase in imports? There is no significant increase in employment, no known increase in wages/salaries, certainly no increase in pensions and the increase in unpaid taxes would suggest that people are financially very strained.

I repeat the question: Where is the money coming from to pay for this rather dramatic increase in imports?

51 comments:

A difficult question to answer. I would say that Airbnb plays its (small?) part. I am not an expert in tourism and, unfortunately, I have no data to support this point, but it is quite usual for Greeks to use this platform to lease their houses to foreign visitors. This creates additional income to many.

According to the former President of the Greek Tourism Confederation (SETE), the taxation of such types of leasing started with the Law 4446/16, valid since 01.02.2017.https://twitter.com/AAAndreadis/status/827802300295081984

I don't know why after all these years you keep making the same mistake pushing alarm buttons too early!

The simple answer to where "the funds commeth" is obviously tourism. In fact it's the seasonal preparation for the tourist season which leads to these large but predictable imports which will diminish as we go forward in 2017.

The other part not many realize is that the government build up an articifially high surplus in 2016 for 2 main reasons: 1.) to lessen the forward measures required (flowing the 3rd MOU negotiation) which are a function of the size of the surplus (the bigger the surplus the lesser the punitive measures) and 2.) build up an adequate reserve to pay upcoming obligations which came and went last April. As soon as the government receives the new funding from the 3rd MOU it will replenish such upfront payments made and will go happily about its business.

As to the question of the size of future primary surpluses the answer is obvious. The government has no anticipated large outlays until 2019 (except the July debt recycling which the Berlin boys will cover). After 2019 the required surpluses will be the responsibility of the next government. If Tsipras is still the next government post 2019 then there will be a whole new assembly of new faces and the responsibilities will be apportioned then and not now.

Come on my "better than German" Austrian friend. Or should I say my friend with the better part of reasoning than the average German?

You know the drill. It's the same every year. Up until May Greece runs current account deficits, then from June to September (sometimes October) runs current account surpluses. The question each year is to what extent the tourist season's current account surpluses will cover the non-tourist season's current account deficits.

I know that is unerving for a German or Austrian to witness the oscillations of Greece's abrupt reversal of furtune but hey! Welcome to Greece. That's how we do it here. We are not automatons and we are not spewing Audis and shit during the winter season for the consumer adicts of the world like Germany and its better half Austria do as the bona fide world champion consumption drug dealers you gentlement are.

Chill out please and proceed calmly to your nearest Greek island serviced this year by the uber efficient Fraport offering a new bathroom experience (that's right, make sure you have your prophylactics with you just in case).

Dearest Phoevos, of course I am familiar with your argument and of course it is correct. That's why I compared the same periods: Jan-Mar 2017 to Jan-Mar 2016. If the former is significantly worse than the latter, particularly with a declining trend, the odds are that the entire year will also be behind the previous year. The 2017 record in tourism will hardly make up for the difference because there was a record in tourism last year as well. So my point is: there is a significant detereoration in the current account and it's due to imports. And my question is: where did the money come from to pay for the imports?

o.k. but my dearest of the Austrian Alps my point is that the main difference of 2016 vs. 2017 is that in 2016 Greece was in a furious pace to put together a primary surplus of 6+ Billion euros because it needed such number for the MOU forward assessment that just concluded. So Greece on purpose created a huge (I am sounding like Trump now) surplus in 2016 because such number was baked into the forward projections of calculations for 2019 and beyond (in other words into the reign of the next Greek government). In 2017 or 2018 Greece is under no obligation to produce large surpluses because no further MOU assessements are due for the next 2 years. In other words Greece would be o.k. to stick with the budget targets for the next 2 years rather than killing itself in overachievement.

In fact Greece just reported a primary surplus for the 4 months ending in April 2017 of 1.7 Billion versus a budget of 798 Million. And of course like you everybody is crying that the 1.7 Bil. primary surplus is lower than the 1.9 Bil. euro surplus for the same period in 2016.

Therefore we must conclude that is either the latest fashion in Vienna is to scream about Greek fiscal performance or as usual the Greek opposition wants to tear the government apart on any grounds be them fiscal, imaginary or otherwise.

I will therefore repeat in vain I guess: Stay calm and everything will be fine. This is not where Greece has a problem. The area where Greece has a problem is that the institutions which pretend to be partners of Greece are basically a bucket of shit (hello IMF and Berlin; how are you?)

Look at the Bank of Greece's statistic of deposits, the row called Corporations and Household (private sector).From an all time high of 238 billion in Sep 2009 it drops steadily to 160 in Jan 2014 and stay there until Jan 2015. From Jan 2015, when the Syriza Government is sworn in, until Dec 2015 it drops from 160 to 123, regardless of capital controls introduced in June. From that it drops to the present 119 billion. That correspond to 1,3 billion per month, or 1,5 billion per month just for the last 27 months. And you wonder how they can afford to blow a billion in a month?To quote the later so famous George Pap "the money is there".Capital controls of EUR 1800 per month has no effect on wage earners, pensioners and self-employed, corporations have their ways of circumventing them. I certainly don't draw EUR 1800 per month, I doubt that you do. Me think we are in another slow bank trot.Lennard

Only idiots would keep their money/deposits in Greece using Greek banks. For starters every time the IMF and Berlin have an issue your deposits risk being confiscated. Number 2, Greek banks are no longer banks. They are instruments of control in Berlin's domination of Greece. So why aid the enemy by helping the enemy's instruments of subjugation? It makes zero sense as far as I am concerned. The money has left Greece and will stay forever away from Greece because Greece is not a safe place to keep money. Never was, as far as I remember.

One could make a case that Greeks are the most astute financial people in the world. As recently as the late 1990s, I understand, most of Greece's debt was held by Greeks and before the crisis, banks deposits were almost a staggering 250 BEUR. Today, the debt is almost exclusively held by foreigners and Greeks have taken out more than half of their deposits from banks. In short, Greeks have rescued their own money to safety and foreign tax payers have replaced the funds. Not bad; not bad at all!

PS: Remember how Varoufakis once made the point that Greeks should take out all their bank deposits because that would really hurt Europe the most? He was right!

Absolutely; the money is safe some place else away from the reach of Brussels. Most of it is in the US and certainly away from the EU. As far as the conclusion it's obvious that you should never open a Greek bank account except for very small amounts and make sure you deplete it by the end of each month. Greek banks are an instrument of control by Berlin and Brussels never to be trusted again. Never, ever, ever trust a Greek bank again or better forever.

My delightful friend Grossegut is asking where is the state (as opposed to individuals) finding the money to finance imports.

I have offered the simple explanation to his Austrian excellency that by the end of March Greece was in possession of a seizable primary surplus estimated upwards of 6 Billion euros. Subsequently the surplus was used in April to meet some other obligations including paying for excessive imports.

Obviously Greek households are under extreme stress using their savings to meet taxation and ordinary daily expenses. There is no evidence that Greek households are spending on imports. Hellenic Petroleum is spending a lot of money to buy crude petroleum and also a number of other organizations such as car rental agencies undergo fleet renewal at this time of the year. Not to mention the TAP pipeline which is 60% complete and perhaps needs purchasing of specialized equipment.

So far His Saltsburg Grace refuses to acknowledge my explanations and is trying to brush them off as well known and expected from a character of my propensities.

We therefore need to wait for a bit more evidence to see if the import trend continues and if the export surge is for real as well.

The primary surplus represents money which the state has taken OUT of the economy and not put INTO it. Where is that money? Well, if the state uses it to pay arrears, it would be putting money back INTO the economy. A bit of that undoubtedly happened. Most of the surplus is used for paying interest and then I presume they build up cash reserves for a rainy day.

The state itself does not finance imports except for those imports which the state itself buys (arms from Germany?).

If the country imports consumption goods, the ultimate user is the consumer. Since the consumers' disposable incomes haven't really increased of late (as far as I can tell), the most convincing argument to me is that the imports are being financed by a draw-down of savings, be they official savings at the bank or cash under matrasses.

Apparently we disagree on this. The state via a state owned company called ELPE (Hellenic Petroleum) has decided to be in the petroleum derivates game because it thought it is uber profitable. To play such game you need to bleed as a state early in the year to buy the crude and then make your profits later during the tourist season by selling overpriced petroleum products to a population (foreign and domestic) that has no other choice but to buy your petroleum products.

If the consumer was the arbiter of imports where is the consumer who is bled and dried to find the money for such expensive habits?

So, during the summer Greece has two distinct and separate types of consumer classes. The domestic consumer which is unable to buy serious stuff to keep up with the consumption game and the foreign consumer (which btw is 2 times higher the entire population of Greece - 10 Mil. Greeks vs. 20 Million tourists) who arguably has the spending power to engage in consumption.

However in order to induce the foreign consumer into spending all of your shelves need to be stocked up to capacity and according to the forein demand. So that is precisely what Greece is doing each year and you every year say "Oh, my God! the effing Greeks are spending again; call Schauble and ask for more austerity".

So I have to deny your request for Greek savings financing consumption. It's corporate capital replenishing its goods in anticipation for a very heavy tourist season. And that is not done through personal savings but rather through bank bridge financing.

But what do I know? You went to Harvard and me only condemned to keen observation.

Here is the problem with the methodology of reporting on the Greek economy and unfortunately both ELSTAT and BOG do an equally bad job on reporting.

Greece has 2 big contributors to its economy: shipping and tourism. Each bring in roughly 20 Billion(actually a bit lower but let's look forward into the future where both shipping and tourism grow and we are not that far from such numbers) each year but here is the catch. Tourism needs to be supplied through imports but shipping is a net contributorto GDP.

So in my mind Greece does not have a trade deficit because if you add imports-exports ( a negative number in the 10+ Bil. range) plus add tourism with around 13 Bil. net and shipping with 15+ Bil. net then Greece has actually a trade surplus.

The problem is how are these numbers reported and registered.

We all read the stories of how Piraeus/Cosco's port is growing by leaps and bounds in tonnage which means primarily more imports enter Greece than exports however not all such imports have Greece as their final destination.

What happens next is a bit of a mystery. So, say a big shippment from China arrives at Piraeus, containers that must be unloaded and put on rail for a different European destination. This is where I lose the ball because ELSTAT and BOG follow different methodologies neither of which I find satisfactory because they don't tell me the whole picture.

The part of the picture they tell me is that Greece as a maritime nation receives a lot of imports to the EU by sea which then have to go through customs.

What happens then? How long does it take for customs to register and then load up on rail and deliver? Eventually a shipment that comes to Piraeus in late March will cross the border for eastern Europe by April some time. So when exactly the import transforms itself into an export? When does the train cross the Macedonian FYROM border?

I have many questions and very few satisfactory answers because I am not interested in bureaucratic procedures but rather the substance of trade.

So I think it's a safe bet that as Piraeus and the Thessaloniki port increase their tonnage that Greece's imports will increase but then some good part of such imports needs to be reclassified as exports. Does it happen in the same month? I doubt it.

That is why we can't sound the alarm bell that something is out of whack in Greek trade. You need to wait a few months to understand the flow of trade.

I know for a fact serious consumption in Greece is dead as a door nail. I also know that the ports are flourishing as hubs of trade activity but not activity intended for Greek consumption.

So I am open to suggestions. How do we hanndle this perception gap and the correct classification and perhaps reclassification of trade goods passing through Greece? Not through BoG and ELSTAT for sure. So what is the competent authority really?

1. Tourism is not part of the trade balance but it is a part of the current account balance as it is viewed as an "Invisible" service.2. If I would order a container load of say T-Shirts from China and this container would be unloaded at Piraeus and from there transported to Switzerland the T-Shirts would be a Chinese export and a Swiss import. They would not show up in the Greek trade balance.Urs

You can always ask yourself the question whether value was added in Greece or not to clarify the matter. So if a Greece import-export company would have ordered the T-Shirts from China and then sold them with a profit to a Swiss company the T-Shirts would occur on the Greek trade balance with the margin of the Greek exporter as surplus.Urs

There have to be some intermediate steps involved which we are missing. So say your container from China has a little Swiss flag on the side as an indicator that the final destination is Zurich. But don't we first have to register the arrival on Greek soil? And Greece receives a fee regardless? What happens if said container never arrives in Zurich and is captured by Albanian Isis sympathizers who love to wear Swiss T-shirts just to show you of Islam's domination of your clean Swiss life?

Anyway you get the point. A container is neither an import or export until it crosses your borders. And since Greece is slated to become the preferred point of entry for Chinese and other exports into the EU there has to be a better explanation as to what acttually happens and which side of the ledger such transactions are recorded.

Quote: "Anyway you get the point. A container is neither an import or export until it crosses your borders."

Wrong (sigh). The border crossing alone doesn’t turn the consignment to an imported one. Ever heard of transshipment and customs seals? You can register the container ’till you are blue in the face as long as the final destination is not within the borders of Greece the consignment is neither imported nor exported. In this case Greece is simply a transit country. The only value added to the Greek economy are indeed harbour and transport fees. Urs

Thank God I did not study my MBA at Harvard whose case study method is thoroughly inadequate in preparing future managers. There are far more serious MBA programs in the United States. Even Trump and Ivanka have their degree from UPenn. Remind me again what sort of useless Phd has Merkel and from what world wide renowed institution?

Feel free to add any eurononsense on the topic to spice it up because we are truly interested to hear the Bruessls BS and you own particular brand of nonsense stemming from your great experience from the world famous port of Zurich which is overwhelmed by ship cargo every day.

"Tourism needs to be supplied through imports but shipping is a net contributor".The ships are financed by Chinese banks, build by Chinese shipyards, insured by British insurance companies, registered in Monrovia, classified by a Norwegian classification society, fueled by Saudi Arabian oil bought in Suez, crewed by Philippines, provisioned by produce grown and farmed in Poland, repaired by a Turkish yard, owned by a Vanuatu company.However, a Greek has a controlling interest in the owner company, he is rather reluctant to contribute any of his hard earned money to the Greek state, or any state for that matter.So much for Greek shipping's importance for the economy.Every court has a jester and every village a Phoevos.Lennard

Lennard dear, the bottom line is that the state on Greece (actually the most important part) is always in transit around the oceans of this world and therefore not subject to taxation or any form of control. Freedom lives and resides on our ships precisely as the Oracle of Delphi predicted a few thousand years ago.

So how will you ever control Greece when its ships are in a state of perpertual freedom and clearly not subject to any attachment to Brussels? So now perhaps you begin to understand what really Greece is: it consists of two parts. The first part is immovable and you fellows of the EU have the permanent obligation to subsidize and support with your own funds plus lend it as needed. The other, the most important part, always sails under the freedom of the seas international laws, exempt from you taxation and is only ours to enjoy and to have.

No, I can't write about Hellenikon airport. It's obvious than an asset worth 5 Billion was sold on paper for 0.9 Billion which today due to delays the net present value of the purchase is close to 0.5 Billion. So the deal is totally skewed to the buyer. What is to write about this? To highlight the hypocrisy of the opposition? Don't we know such already?

Isn't that funny? And you guys complain that we cheat on tax receipts and that 25% of the Greek GDP is part of the grey economy and unaccounted for. So I guess we are playing a little game with you because you know there is no way that you will finally win nor that you will ever control the Greek economy which by the way I am willing to bet is growing just fine but you are not allowed to see it because this little secret is only for us to know.

Like quite a few things with Trump, he discovers a good and important issue but by the way he handles himself, he damages the credibility of the issue and of himself.

This really goes back to 1992 when Ross Perot became the first American politician to really hit on the issue of trade. He prophesied that with all those one-sided trade agreements, "you will hear a giant sucking sound of jobs moving South" (China was not yet an issue then).

As I have written in this blog ad nauseam, it's not really the more narrow issue of trade which matters. Instead, it's the overall issue of the current account which is crucial. If someone would only explain this to Trump!

The current account shows the transfer of wealth from one country to another. A current account deficit increases the claims that the rest of the world has against you. It transfers ownership of domestic assets to foreigners or creates new domestic assets for foreigners. In balance sheet terms, a current account deficit reduces the net worth of a country. The American current account deficits over the last 40 years have turned the US from the world's largest creditor into the world's largest debtor. So, yes, Trump is right when he says that American wealth (net worth) has been depleted over the years. The only question is whether that matters.

Highly intelligent economists can debate forever whether or not that is a problem. For most countries it is a huge problem (Greece went bankrupt over its current account). Perhaps not as much for the US because the US has its foreign indebtedness in a currency which it can print. From that standpoint, it's like a Central Bank increasing its liabilities in its local currency by printing money. Whoever says that he no longer wants to finance the US and calls his loan on maturity gets back as repayment --- dollars. The US cannot run out of dollars the way Greece ran out of Euros.

My own conviction has been repeated endlessly: current account balances DO matter (surpluses equally as deficits) and over time the current account should be more or less in balance.

When Trump tells German politicians to reduce the exports of cars to the US or else risk a 35% import tax he is making a fool of himself because he should know that politicians have no way of doing that. Really, the only credible thing German politicians could do in the short term would be to return to the DM but even that may not be the solution to the problem (the CHF has revalued by over 50% and yet, the Swiss current account surplus sets new records every year).

Two constructive approaches would be focus on increasing German imports from the US (or Greece) and increasing German tourism to the US. The way Trump goes about it accomplishes the opposite.

If, in the absence of the devaluation possibility, the solution for Greece was 'internal devaluation', the longer term solution to the German problem would be 'internal revaluation'. The government could start by substantially increasing public sector wages which would force the private sector to act accordingly. Increasing public sector investment is easier said than done when the operational limits (not the financial ones) have already been reached (as the government is saying). Increasing private sector investments has been taking place for years except that it is taking place more outside than in Germany (German companies often find foreign countries more attractive to invest in; that trend would increase if wages were increased disproportionally).

So here you have it. Trump's point is excellent. Imbalances in trade and capital flows are THE world-wide issue today. Trump shouldn't devalue his point by going about it foolishly.

PS: particularly developing economies will require a current account deficit for years. They are well advised to finance it more with foreign investment than with foreign debt.

Let me put my American hat on and reply using stern language which is the only langaguage a trade junkie like Germany understands.

After 2 particularly bad years 2014 and 2015 when the German trade surpluses went out of control, the US has turned the corner in 2016 and the numbers so far indicate that 2017 will be a similar story of downward trend and containment of German trade excesses.

https://www.census.gov/foreign-trade/balance/c4280.html

It would be ridiculous for you or any other European to try giving us Americans lessons on what you consider reasonable or unreasonable because quite frankly only our opinion matters in the subject topic. We will tell you what is reasonable because we are the most reasonable people in the world and your job would be to comply with it - no questions or debate would be necessary.

Thank God the USA has an unmatched economy of $18 Trillion which is roughly 6 times the size of the German economy. And then we have Japan with an economy 2 times the size of the German economy and China with 3 times the size of the German economy. So we have some heavy hitters out there and when it comes to trade my sincere suggestion is for Germany to start taking lessons from Japan because the Japanese not only have excellent products to sell, craftsmanship which is unmatched in the world but they also know how to fly quietly and efficiently under the radar screen doing their job with minimum opposition.

So, the problem for Germany is not Trump who is preparing tarrif legislation as we speak, due to the systematic abuse by the Germans. Arguably the Chinese and Japanese have higher trade surpluses with the US but for whatever reason they are neither abrasive nor arrogant as the germans who clearly need(actually begging) to be put in their place.

The problem for Germany is that trade with 3 countries namely France, UK and the USA generates about 60% of its overall trade surplus as this nice Destatis evidence of world crimes indicates:

"https://www.census.gov/foreign-trade/balance/c4280.html"

So basically Germany has come to a point that it has to pay for its past crimes and uber bad behavior because the UK will be lost anyway due to Brexit and USA as well as China will refuse to absorb any more German products.

The beauty of course of such punishment is that each time Germany would complain I would be whispering the name "Greece, Greece" in its ear so that Germany understands the meaning of karma which might help in the long term reformation of the cruel German soul which is bound straight to hell as far as I am concerned.

I had voted for Perot (avoiding the Clinton mistake) and then 4 years later voted for the only Republican candidate (Bob Dole) I have voted in my life so far. I have been an Independent ever since. I almost voted for Trump because he gets it on foreign trade but since I live in California and in order to avoid a bloody marital war in my household I voted for the useless female Clinton version after it became clear that no California vote would matter anyway on election day. I have to confess though that during the California primaries in June 2016 I had registered as a Republican in order to vote for Trump as the best insurance of destroying an uber incompetent Republican party which he did. But let's keep this between us for now because such fine strategic points are not really appreciated in my household where Mrs. Phoevos German ancestory might take an exception.

Regarding your pro-America plea, I have to admit that I am an American at heart. I have had my formative years in the US (studying, career with Americans for 17 years) and I can compare with the 7 others countries that I have lived in. I do share some of the gut feelings which Trump bases his policies on. For decades, Americans have sold themselves short without any reason for doing so. On the contrary, I have always argued that the mightiest power in the world MUST present itself powerful in order to be taken seriously by traditional powers who have grown up with Realpolitik. Yes, I think the hands of European leaders should get a bit sweaty when the US President enters the room because, after all, twice last century those highly sophisticated and superior Europeans had to be saved by the barbarian Americans from knocking each others' brains out. Or as Warren Buffett would say: "Let's continue this conversation on the beaches of Normandy".

For about 40 years, the US as an economy has been overspending as expressed by current account deficits. Overspending by the US represents over-earning by the rest of the world. In short, the no-fear-of-debt-having American consumer has been responsible for much of the growth and prosperity in the rest of the world. All I would expect from the rest of the world, particularly from the Europeans, would be a simple 'thank-you' every once in a while. Instead, they outdo each other with anti-Americanism; they appraise American presidents to see whether he lives up to their standards, etc.

I was enthusiastic about Ross Perot, too. Probably because he looked at things with the common sense of a businessman. I was also enthused about Barack Obama back in 2008 because I truly thought that he was a tough guy who only played nice on the outside. George F. Will wrote at the time: "Beneath those white shirts is hard steel". Well, Will - and a lot of other people - were wrong about Obama.

I still think Obama had the chance of a lifetime to change America and its position in the world. I also think that Trump was only possible because Obama disappointed so miserably. I think many people who cheered for Trump had cheered for Obama back in 2008 because, in a way, both had a similar appeal. Obama could have accomplished the objective in a polite way. Since Obama failed, Trump is now trying to do it in with the sledgehammer. I would not have voted for Trump but I have to say this today: if Trump is a problem, it's temporary problem because sooner or later Trump will be part of presidential history (the way it looks right now sooner). The far greater danger for American democracy and liberty is the hysteric anti-Trump phalanx which Trump has provoked with his continuous baiting. That phalanx has been here and has grown for years, it just hadn't become so noticeable before Trump. Now it is out in the open and it should scare every person who believes in liberty, freedom of thought and minimization of bias. A few months ago, Chuck Schumer called Trump dumb for the following reason: “Let me tell you, you take on the intelligence community, they have six ways from Sunday at getting back at you." Did he realize what he said? Are we back to J. Edgar Hoover times? Or perhaps even McCarthy times?

I am glad that America now has a president who shows the rest of the world what a giant America is and how much the rest of the world owes America. Regrettably, the way Trump does it will in all likelihood lead to failure.

LOL! I knew you would turn it into a marital issue. Mrs. Phoevos and I have been married for 30 years and I love her both as a partner and as a friend. Her father comes from a line of Germans close to the Austrian border who came to south America circa 1850s. Her German-Columbian dad lives with us and he is a fine fellow. The only disagreements we have is when he wants to see Bayern-Munich games because they are the best. Of course I try to pint out to him that UEFA final has a Spanish vs. an Italian team but such details don't matter. They used to have a plantation exporting cacao to Switzerland for chocolate making. Everything is good here, we are at peace. Not so with modern Germany and Greece. I have lost both of my parents during this new German occupation of Greece and it's exceddingly hard to either forget or forgive. othe died unnecessarily in my opinion under conditions directly related to the brutality of Berlin. So, Phoevos who is the God of Revenge according to the ancient tradition knows what he has to do to make it right. Sorry for the inconvenience.

Your comments about America are noteworthy and we seem to share a lot of common thinking eventhough sometimes (or most of the times) I go out of my way to indicate disagreements with you which I should know better.

The part I like about America is its meritocracy and love of freedom. I also voted twice for Obama and I have come to regret it a bit because even though his heart was in the right place his ability to lead remains questionable.

The jury is out on Trump yet. He is smart but also used to an executive environment where he was the boss and calling all shots. The founding fathers of the American Revolution would not like a president like this. They would prefer a person of strong moral character with the ability to persuade. If you can't persuade then you can't lead. Europeans have this unfair impression about Americans of being unsophisticated hillbillies with no culture. However, the truth is that America has many very smart people and well trained to get things done. The part Europeans need to pay more attention to is the fundamental transformation of the US foreign policy towards a balance of power game rather than direct intervention. If Europe does not heed the Trump message to create a credible military it risks being unprotected in the future and with a serious migration problem to boot. The two armies than can do the job in Europe are the British and French armed forces but the EU has now lost Britain in a manner I consider irreversible. If Brussels continues to treat the British as a case worthy of punishment for the those remaining in the EU prison, the damage for Europe will multiply fast and with no credible way of containment. What the Europeans need to remember is that eventually, America might come to their aid but they need to have serious skin in the game and bleed first(and bleed a lot before American aid arrives). At the moment, the only European country the US is really interested in is Poland and I am not sure Berlin understands that.

It's a developing game and we are bound to follow it, I am sure. America's military strength is in her navy. America has no natural enemies, a friendly and sparsely populated Canada to the north and hot-tempered Mexico to the south. And two oceans, the Atlantic, and the Pacific shielding it as a buffer from east to west. The US is interested in developing a true friendship with China subject to the Chinese showing restraint. That's the way I see it. Will see if Germany manages to become significant in such world view but for now, Germany is a mercantilist society that needs to be watched because it's easily prone to excesses. Greece gives a particular weight to Germany(I am not sure why) but the US can not take seriously a country that can not pull its weight in defense and instead freeloads and manipulates free trade. So be careful and I am sure when things get hot Austria (the better Germany) will step in to save the rest of the Germans from their destructive hubris which is not at all appreciated in the New World.

When you write about the original intentions of the Founding Fathers, you get my juices going. Much to my embarrassment, despite all my love for America, I had never really concerned myself with her history. Except for the commonly-shared narrative that there was a bunch of people craving for liberty, that they fought for it and - manifest destiny - that they got it. A miracle come true. The good guys win, after all! And, of course, all the FF were god-like people with Thomas Jefferson towering above all.

Last year, a friend recommended to me the biography of John Adams by David McCullough. That really got me started and by the end of the exercise I had read almost 20 books on the period 1850 all the way up to Andrew Jackson (the Donald Trump of his time).

Thomas Jefferson would get sick to the stomach if he saw the USofA of today! He was literally scared of any central power physically removed from the people. He would hate the Office of the President of today because he hated everything which smacked a bit of monarchy. He would consider the USofA of today as a complete betrayal of the American revolution! His night dream would be an Executive order from Washington D.C.

Alexander Hamilton would be jubilant today. He was the Varoufakis of the time who was enamored with federal power and who understood that federal debt was a key instrument to create federal power, to make capital markets work and to stimulate growth. Just like Varoufakis, Hamilton left office more or less discredited. Today, he is vindicated to the tilt. In fact, one could easily come to the conclusion that without Hamilton, there would be no USofA of today. So there is hope for Varoufakis - perhaps he will be vindicated in a couple of hundred years. If he is, it will be for the same reasons that Hamilton is vindicated today.

If George Washington saw today's political infighting, the dirty games played among opponents, the use of leaking as an instrument of power, etc. - well, he would probably say "that's just like in my time when Thomas Jefferson used every trick in the book, however dirty, to discredit me and Hamilton".

So the godlike FF were human beings just like everybody else with all the same human frailties. The only difference is: all of them knew that they were making history for eternity, that everything they did, said or wrote would be on the table for historical analysis forever. And they all wanted to make sure that history would treat them well. So they tried their best to act accordingly.

One of the convincing arguments was that if the FF had lived in England at the time, they wold have remained ordinary people leaving no special footprint. It was the circumstances that made them FF and once they were, they behaved accordingly.

The FF created the myth of manifest destiny, that America was unique, that God had given America that uniqueness so that Americans could make the world a better place, etc. And we all like to think today that from the first shot at Concord to George Washington's inauguration, it was all a god-designed process which would give the world the USofA.

The truth is: when you read about all the pitfalls Americans experienced on the road towards becoming the United States, you almost have to consider it an accident of history that the USA ever came into existence. If you compare that with the EU of today, the EU of today is a much more cohesive union than America was until Jefferson became president. The odds then that there would ever be a USofA were significantly smaller than the odds of today that there will ever be a United States of Europe. However, if Thomas Jefferson returned to Earth, he would go to Brussels and tear the place apart, and return power to the nation states. And Hamilton would cheer for Varoufakis that he should prevent that. Marvelous are the ways of history!

You know more about American history than most. The thing is that even though Americans fought against the British for independence they always shared a common bond with the mother country as this piece of particular affection (since you mentioned John Adams) indicates:

https://www.youtube.com/watch?v=n725zX3zIk0&t=13s

As for Varoufakis I don't think he will be vindicated. His and Syriza's naivite in dealing with matters outside the borders of Greece will forever stain a period of ineffectiveness and humiliation of Greece.

As to the fragility of the early stages of American history let's remember that the United States actually lost the War of 1812 against the British eventhough by some miracle the conclusion of this disasterous war left the United States borders pretty much the same as at the start of the war.

Regarding the notion that things could have gone differently for America and since next week we are approaching the anniversary of the Battle of Midway let me remind Europeans who are inclined towards the lessons of history is that the victors always seem to have a technological advantage against superior enemies on paper. In Midway'ss case as later in the European theater of war the advantage could be summed up that the enemy code was broken, the American Navy had the benefit of radar and the American commanders had both initiative and drive:

Somehow we got from Greece's current account to American history but I can assure you, I don't think I have ever read any history so interesting as the first few decades of the USA. I had seen the John Adams TV series some time ago. Adam's presentation to King George is the authentic historical text as recorded by Adams who said he had memorized it innumerable times. King George's last sentence is not historically authentic but I think the TV producers did a wonderful job when the put the following words into the King's mouth: "I pray, Mr. Adams, that the United States does not suffer unduly from its want of a monarchy!" When you look at the Office of the President, its glamour and grandeur, today, one can only conclude that Americans are truly suffering from the want of a monarchy, at least as far as the ceremonial side is concerned.

It is very sad to see that also this blog has been hijacked by an anti-German troll, probably belonging to one of the Russian troll factories. We have seen them elsewhere too -ekathemerini, MacroPolis - and we will see more of them as closer we get to the German elections I am afraid.

Oh my heart goes to you in such undue sufferings. So you really have a problem with democratic opinion? How unfortunate for the giant pig farm organized under the Prussian tradition. My darling you must endure. There is no other way plus it's going to get a whole lot worse for you people after your pseudo-elections who are manufactured to produce another diesel VW version of a modern day monarch and autocrat because we so much need such royal personnas in Europa.